What is the main financial commitment Marriott has made regarding this new EDITION hotel?

Marriott has agreed to provide credit support to the lenders of the construction loan through a "Put Option" agreement. This option allows the lenders to require Marriott to purchase the hotel component for up to $315 million under specific default conditions by the ownership group.

Does Marriott own this EDITION hotel?

No, Marriott International, Inc. explicitly states in the filing that it does not have an ownership interest in this EDITION hotel. They are involved through a management agreement and the Put Option.

What is the timeframe for the Put Option?

The Put Option can be exercised by the lenders during the first two years after the hotel opens. This period may be extended by the lenders for up to three years if foreclosure is necessary due to loan acceleration and other conditions are met.

How likely is it that Marriott will have to buy the hotel?

Marriott's management believes that the likelihood of the lenders exercising the Put Option is remote, suggesting they are not overly concerned about this potential obligation.

MAR 8-K: Financial Events

Summary

Marriott International, Inc. (MAR) filed an 8-K on January 15, 2014, to disclose a significant financial obligation related to a new EDITION hotel project in New York City. While Marriott does not hold an ownership stake in the hotel, it has entered into a management agreement and, crucially, provided credit support to the lenders of the construction loan. This support comes in the form of a "Put Option" that could require Marriott to purchase the hotel component for up to $315 million under specific default scenarios by the ownership group.

Key Highlights

1Marriott announced plans for a second EDITION hotel in New York City, projected to open in 2017.
2Marriott entered into a management agreement for the EDITION hotel.
3Marriott provided credit support to lenders (Starwood Property Trust and iStar Financial) via a "Put Option" agreement for the hotel's construction loan.
4Under the Put Option, Marriott could be required to purchase the hotel for $315 million if the ownership group defaults and the loan is accelerated, subject to certain conditions.
5The Put Option period is for the first two years after opening, potentially extendable up to three years.
6Marriott explicitly states it does not have an ownership interest in this specific EDITION hotel.
7The company believes the likelihood of the Put Option being exercised is remote.

MARRIOTT INTERNATIONAL INC /MD/ 8-K Report, Financial Obligation (Jan 15, 2014)

Summary

Key Highlights

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